Stuntmen getting 'stunned and stunted' by threat of Service Tax
FEBRUARY 28, 2017
By Pritam Mahure, CA
A couple of months ago, death of two young stuntmen made headlines in newspapers and 24x7 news channels. Debates about the risks associated with such 'death-defying', not always, stunts raged for a few days but they soon were forgotten. The loss is for the family and no one else. The lives of Stuntmen does not appear to be valuable enough as insurance companies refuse to insure stuntmen being a high 'risk' business and the Government even avoids offering sympathy to stunt 'artistes'.
What do stuntmen do?
Stuntmen are employed by film and television producers particularly for dangerous action sequences consisting of falling/jumping from heights, driving vehicles dangerously throughfireetc.Compared to the risk a stuntman takes, he is paid a meagre sum on daily/shift wage basis. In this environment, they struggle to make ends meet in their "work life-span" which does not extend beyond 7-8 years.
In India, as movie or serial production is largely un-organised, the stuntmen have been struggling to get payment of their wages due and compensation from the producers. The problem becomes more severe given that almost all stuntmen are illiterate / below poverty line, who could be literally 'taken for a ride' by the rich producers.
What is Trade Union?
As per section 2 (h) of Trade Union Act, 1926 a "Trade Union" isformed primarily for the purpose of:
Regulating the relations between -
a. Workmen and employers or
b. Between employers and employees
Members of Trade Union are not employees of the Trade Union. Rather, to regulate their employment with producers, Trade Unions are formed. In this background, the Stuntmen Associationis one such Trade Union fighting for the rights of the stuntmen.
What is the issue?
The work of such Associations is to ensure that the stuntmen are paid the agreed sum and compensation in case of accident or death.
Producer hires a stuntmen for performing stunts/ action sequence and wages are agreed between producer and stuntmen which are typically standard industry rates. T o ensure producers pay the agreed wages, the mechanism devised is:
a. On completion of the shift/ work, the stuntman work memo is prepared based on which producers gives the agreed wages of stuntmen to the Association (through cheque/ DD/ bank transfer) – This ensures timely payment of wages by producers.
b. Association transfers this amount to the stuntmen - This ensures timely payment to stuntmen
For ease of understanding take a look at the tabulation below:
It is pertinent to note that Stuntmen are neither employee of the Associations nor the Association is supplying manpower. Associations only acts as a bridge or facilitator ensuring that the stuntmen get their due wages. This methodology (of association receiving the wages and then disbursing the same amount to the workers) is deployed across many mathadi kamgar, mazdoor sangh, kisan sangh, labour associations/unions, inherently for protecting the interest of the un-protected and un-organised workers. This is in accordance with Trade Union Act, 1926.
The fact that producers pays wages to their employees / stuntmen is apparent from 'Daily Wage Memo' wherein its clearly mentioned that Association collects the amounts for the disbursement of wages to all the members who work for producer.
What is department view on the Service tax applicability on these Associations?
Recently, it appears that the Service Tax Authorities have been taking adverse stand in Audit/ investigation by proposing levy of service tax on these Associations.
What Service Tax legislation says?
Service tax is not applicable on provision of service by an employee to the employer in the course of or in relation to his employment.
In the instant case,stuntmen are employed by the producer for fight/ action sequences on daily / shift wage basis. Thus, producer is the employer and stuntmen are the casual workers. In this regard, non-applicability of Service Tax on daily wages / casual labour is clarified in the Education Guide at Para 2.9.4 as under:
2.9.4 What is the status of services provided by casual workers or contract labour?
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If……
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Then….
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Services provided by casual worker to employer who gives wages on daily basis to the worker
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These are services provided by the worker in the course of employment
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Casual workers are employed by a contractor, like a building contractor or a security services agency, who deploysthemfor execution of a contract or for provision of security services to a client
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Services provided by the workers to the contractor are services in the course of employment and hence not taxable. However, services provided by the contractor to his client by deploying such workers would not be a service provided by the workers to the client in the course of employment. The consideration received by the contractor would therefore be taxable if other conditions of taxability are present.
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It can be observed that the Education Guide clearly mentions that Service Tax is not applicable on casual workers employed on daily wages. As stuntmen are employed by the producers, the applicability of Service Tax on the same does not arise at all.
It is also pertinent to note that the Association is neither a 'contractor' nor a 'manpower supplier' as stuntmen are not employed / deployed by the Association as stuntmen are hired by the producers and the stuntmen are responsible for doing the work/stunt. Given this, producer is the employer and stuntmen are employees.
As regards Association, it is evident that there is no relationship of an employer and employee between Association vis-à-vis stuntmen.
Only to ensure that the stuntmen get their dues in time, in accordance with Trade Union Act, 1926 , the producer pays to Association and in-turn Association remits wages to the stuntmen.
As the Association is not employer of stuntmen, even Provident Fund (PF), Profession Tax (PT) and ESIC legislations are not applicable. Given this, Service tax cannot be said to be leviable on the association as per aforesaid clarification in the Education Guide.
Alternatively, it can be said that the wages received and transferred by the Association to the bank account of Stuntmen wouldqualify as 'pure agent reimbursements' as per Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006and in-turn will not attract Service Tax.
It may also be noted that sr. no. 28 (a) of Not. No. 25/2012-ST exempts even services provided by a trade union by way of reimbursement of charges. When the Government's intention is to even exempt services provided by a Trade Union, then there is no question of taxing something which is not even a 'service' (as discussed above, the Association is not an employer).
Way forward:
In India, stuntmen are daily wage/shift earners and are a struggling lot facing uncertainty, exploitation, no insurance cover or Government support. In midst of all these, a handful of labour Associations are left who are ensuring timely payment of wages and fighting for the cause of such daily wage / shift earners.
Does CBEC really intend to levy service tax on all similar Mathadi kamgar, Mazdoor sangh, Kisan union, labour associations/ unions or come out with a section 11C notification?
A humble request to CBEC is to make its stand known, loud and clear.
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